Answers to your insurance questions

At the present time, fire or explosion following terrorist attacks or earthquake, is not excluded from most homeowner policies in Alberta.

Earthquake is not normally included in a personal homeowner policy, and must be purchased as an add-on coverage.

Changes came about since 911, when the claims were horrendous for the resultant fire damage to the commercial buildings, following the terrorist attacks. The insurance companies, decided there was a need for the wordings to be changed, and now they exclude this coverage under the commercial wordings. There is a movement to exclude it from all personal property policies.

Certain commercial risks will purchase separate insurance for this special coverage. This is practical for a large commercial property company, with many locations that would suffer irrecoverable damage in this particular event.

Some risks are just deemed to be more then insurers can underwrite. At this time, the resulting fire from an earthquake, such as what has occurred at Haiti, would be covered. The earthquake shock damage would only be covered if the person or business had purchased the earthquake extension, and it might again be limited to only the wind and water portion. The important point here is, that what you think you might have under your home insurance, may not be correct.

The Alberta government is considering a proposal that would prohibit all insurers from excluding claims for fire damage, following an earthquake or terrorist event.

The insurance industry is aligning strongly against this idea. The concern is that the insurance companies would not have the resources to pay out all the resultant fire claims after a terrorist attack.

Reinsurance is not likely to back down on their exclusion of fire, following a terrorist attack or after an earthquake. The insurance companies want the government to provide a backstop, to limit the exposure of private insurance companies to damage arising from terrorist events. This is seen as a situation when the government needs to step in to provide emergency funds, and not to be a duty of the insurance companies.

The Alberta government is concerned that the current definition of terrorism in the Insurance Act is too broad. This definition could be interpreted by the insurance companies to the detriment of the general public. If, for example, the insurance companies excluded damage created by acts of vandalism under the mantle of "terrorism."

The insurance answer
It appears that the definition of terrorism needs to be clearly spelled out. Albertans need to know that someone is going to help them after the damage of a terrorist attack, whether it be their home insurer or their government. It needs to be decided now, so that there is no confusion, if and when the time comes. We strongly suggest that you check with your broker, as to the wordings on your insurance policy regarding terrorism and earthquake with resultant fire loss.